While most deep-pocketed hedge funds are copying the playbooks of Tesla and buying Bitcoin, many curious digitalists and everyday investors are looking towards a provably scarce class of digital assets: non-fungible tokens, or NFT.
Over the past few months, the popularity of NFTs has outgrown almost all other crypto segments, including DeFi. According to Google trends, NFTs gained more traction than DeFi briefly during February. The curiosity has the trading volume on NFT marketplaces reaching unprecedented levels, going from $500k in mid-January to beyond $50 million in February. There’s been a lot going on with NFT’s since Crypto Kitties back in the day. As NFTs begin to storm the world of cryptos, let’s try to understand what they are.
What is an NFT?
A non-fungible token is a kind of cryptographic token that is unique, indivisible, and non-interchangeable. These tokens are used to represent unique or rare virtual and real-world assets. NFTs can represent any unique in-game item, digital art, or famous paintings. The token’s smart contract stores the identifying information that makes it unique and helps buyers verify its ownership and uniqueness cryptographically.
For instance, a concert ticket is a unique non-fungible token. It indicates a seat, in a specific concert, at a particular time. Someone cannot buy this ticket partially, they must purchase it as a whole because only a single person can use the seat.
Fungible tokens, on the other hand, are divisible and can be exchanged for another token of the same kind. For example, 1 BAT token is equal to 10^18 million “weis” – the smallest unit of BAT. Each wei can be exchanged for one another without changing its value. A 1 Dollar bill is fungible as well. You can exchange $1 bill for another $1 bill and it won’t make any difference in the value which one you have.
NFTs are based on the ERC-721 and ERC1155 standard, which are token standards specified by the Ethereum network. On the contract, tokens such as BAT or ETH are ERC20 tokens.
The Story Behind NFT
Dapper Labs was the first to develop an NFT in 2017 through a game called CryptoKitties. It allowed users to buy, trade, and sell virtual kittens. Coincidentally, the crypto bull market started during the same time, which added fuel to the growth of Cryptokitties. Looking at the exponential growth, investors began to pour money into Dapper Labs, and that’s when people realized the power of NFTs.
NFT Art Brought NFTs into the Limelight
Digital artists have certainly embraced NFTs, but the amount of money brought to the market by selling their artworks made NFTs mainstream. The last half of 2020 observed artists selling their artwork at crazy prices. For instance, an artist sold his NFT digital artwork for 262 ETH ($101,100 as of September 2020). A month later, another NFT sold for $131,250, which was the highest price of an NFT product sold at that time. As per the recent data from Cryptoart, the estimated total value of crypto art has now passed $100 million. That’s just one vertical of non-fungible tokens.
In Comes Hollywood
It’s not just art. The celebrity club has also joined the NFT craze. In October 2020, RAC, a Grammy award-winning rapper launched an ERC-20 fan token called $RAC to reward his loyal fans. $RAC holders get access to RAC’s private group and receive early access to merch drops. Another Hollywood pop star, Lindsay Lohan just sold an NFT for $59000.
Where to Next?
The year 2021 is going to be a banner year for NFTs. Developers are creating innovative uses and interoperable items that are poised to be a complete game-changer. Here are a few use-cases of NFTs that are currently booming:
- NBA Top Shot is a blockchain-based platform built by Dapper Labs that allows fans to collect, trade, and sell officially licensed game clips. Recently, NBA Top Shot observed close a 24-hour volume of $10 million and sold over $100 million of “moments” in 13 months.
- CryptoPunks, a niche collectible marketplace has a base floor of roughly $18,000 per piece. Lately, the platform sold Punk 4156 for 650 ETH, equivalent to USD 1.2 million.
- Artists are also finding cryptocurrency platforms to boast their work, with marketplaces like Nifty Gateway providing Supreme style drops for digital art.
Get Some Free NFT Airdrops to Test the Water
Experts are comparing NFTs’ mania to that of ICOs. Above all, they’re too costly for someone just getting started. A fun and cost free way to try your hands on NFTs is Airdrops. Here are some popular upcoming NFT airdrops for you:
- PancakeSwap is offering a limited edition 3D Animated “Bullish” Lunar New Year NFT to the first 8,888 users who make a profile on their platforms.
- DEGO Finance is airdropping over 100 NFTs to their community member.
- Seedify.fund is another blockchain incubator program offering free NFTs to the top 100 lucky participants.
Despite the massive growth experienced in the past three years, the space is still young and has massive potential to grow. Chances are that in the next few months, the NFT space will look radically different. In that case, we will continue to cover the market. Things to look forward to are: NFT Art, NFT platform, and of course NFT Airdrops. So, stay tuned for more updates and airdrops.